In conjunction with its announcement of the Netfinty Direct program to sell its servers directly to some corporate customers, IBM Corp has also refined its Advance Fulfillment Initiative. The AFI plan, introduced last September (CI No 3,247), allows channel partners to custom configure PCs at their locations. It slims the channel assembly program by bringing a few of IBM’s major partners into its own manufacturing facilities to assemble PCs there for direct shipment to customers. With its latest move IBM has essentially removed all elements of price protection under the API. Channel partners that kept just 15 days of inventory were offered a 2.5% reduction in price and, IBM says, since the vast majority of resellers opted for that plan, and it is working so well, it will be offering only those terms. It has also now expanded the program to cover what it calls second-tier vendors. The reduction in inventory brought about by just-in-time type manufacturing will allow the company to take advantage of declining component costs. IBM says that it can also now reduce incentive payments to resellers and that overall inventory costs are coming down. What all this means for the company is that it can continue to remain price competitive with rivals Dell Computer Corp and Compaq Computer Corp. The company says it will continue to refine its AFI over time to continue lowering costs.
